The Dubai Government is considering a crackdown on the flipping of off-plan properties.
The emirate is weighing up the introduction of extra fees on off-plan sales and placing new restrictions on such sales, the government’s media office tweeted yesterday afternoon.
The long-anticipated news follows an influential report by the IMF published this month that highlighted the issue of flipping – or buying off-plan homes then selling them before they are completed at a profit.
“Imposing additional fees and restrictions on reselling off-plan properties, as currently under consideration, would further discourage speculative demand,” the IMF said in its report.
The practice of flipping was widely blamed for inflating property prices in Dubai before the global financial crisis.
No details were given yesterday as to how the fees would be charged, but property agents speculate that a new system would charge flippers on a sliding scale, based on how long they had held the property.
“We welcome the news that the government is looking to do something about this,” said Craig Plumb, the head of research at JLL’s Dubai office. “However, the devil will be in the detail. I’m sure it would be possible to do something like this, but at the moment I’m not entirely sure how it would do it.”
If it goes ahead, the move would be the latest in a series of measures brought in by the Dubai Land Department over the past year to calm the emirate’s spiralling property prices.
Last August, Sultan Butti bin Mejren, the director general of the Dubai Land Department, was quoted in The National's sister paper Al Ittihad as saying that the department would introduce seven new laws in 2013 and 2014 to further regulate Dubai's property market.
A month later, the DLD announced it was doubling the transfer fee levied on each sale in the emirate to 4 per cent of a property's value in an attempt to reduce speculation. In November the department opened a Rental Dispute Resolution Centre to better handle rent dispute cases.
Since then the department has also made moves to standardise rent contracts and to introduce licences for short-term property lets.
According to JLL data, house prices in Dubai rose 22 per cent last year and are likely to hit their 2008 levels this year.
lbarnard@thenational.ae
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